We all want to save and paying the lowest cost for an item is always an objective. But sometimes, lower cost can mean lower quality. This could be true of long term care insurance.
Most long-term care insurance policies are "guaranteed renewable" which means once you get the policy and get accepted, you have the policy for life as long as you pay premiums (in most states ALL policies are guaranteed renewable by law). Unfortunately, people sometimes get the wrong impression that this means the premiums will never go up. What this does mean is that you cannot be cancelled or singled out for a price increase or have your policy cancelled, even if you have filed claims. Nevertheless, the rates can go up.
Long term care insurance companies issue policies in a "series." A series is typically all individuals of the same age. Later the insurer can ask your state insurance commissioner for a premium increase on all policies in the series. Therefore, since insurance companies have the right to ask for more money, you may wonder: Is the rate hike a result of legitimate, higher expenses, or was the initial low price an enticement to get you to sign up? There is no law that prevents a company from pricing their policies low and then attempting to get a significant long term care premium increase theraefter.
When you buy a long-term care policy, you are relatively healthy and can afford the premiums. However, if you are on a fixed income, a huge rate hike several years down the road can come at the worst possible time. Of course, you could then shop for another policy. But you will be older and rates for your age bracket will generally be higher. And if you have incurred health problems, the chance of getting long term care coverage from another company is reduced and even unlikely. Additionally, the long term care premium will be higher when you start with a new company as your age is older.
What can you do to reduce the probability of a mammoth rate increase? Look carefully at insurance companies that offer cheap prices, have a history of rate increases, and call for little or no medical requirements. Ask any agent for the history of price increases for his recommended company and if he is reluctant to provide, walk. Insurance is sold on a State by Sate basis and your state department of insurance may show the long term care insurance cost history for each company on their web site (most state departments of insurance DO have the info on their web site).
Even though it could be more difficult to get coverage from a company that has strict underwriting guidelines, their long term care policies may possibly be less likely to have high price increases in the future. When you shop, don't just look for the lowest price today but also the lowest long term care insurance cost over the next 3 decades. A good idea might be to ally with a low-cost insurer and also one of the higher-priced by less prone to increase prices. If you get accepted by the latter, it may be in your best long-term interest to take that policy.
Leave a Reply